JAN 10, 2014 12:14pm ET

Hilltop Bids to Acquire All of SWS for $160M

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Hilltop Holdings Inc., Dallas, has made an unsolicited offer of $7 per share to acquire the 76% of SWS Group Inc. it already does not control.

The offer, consisting of 50% Hilltop stock and 50% cash, was publicized before the market opened Friday morning.

As of noon, SWS is up by $1.27 per share to $7.33. Its volume, normally around 75,000 shares traded, is over 548,000 shares traded.

Hilltopís move has investor support as its stock is up by $1.76 per share to $25.20.

SWSí initial response is that it will review the offer and its shareholders are advised not to take action at this time.

Hilltopís chairman is Gerald J. Ford, who made his reputation in the mortgage industry as the chairman and CEO of First Gibraltar Bank and then First Nationwide Bank. Among Hilltopís subsidiaries is mortgage banker PrimeLending, a part of PlainCapital Corp. It also acquired First National Bank of Edinburg in an FDIC transaction. SWS subsidiary Southwest Securities FSB is a mortgage warehouse credit provider.

Hilltop invested $50 million in SWS during 2011 in the form of an unsecured loan. In return, SWS gave Hilltop a warrant to purchase 8.7 million shares of its stock at $5.75 per share. That warrant is included in Hilltopís calculations of how much of SWS it controls.

The deal does require the consent of Oak Hill Capital Partners because of existing debt and related agreements it has with SWS, a letter from Hilltop points out.

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